Corn market extends losses on Wednesday

Corn futures extended their moderate losses from Tuesday’s WASDE report during the Wednesday CBOT session. The drop worsened in the wake of an announcement that a large South Korean firm had made a large purchase of South American and South African corn and excluded product from the U.S. This news apparently renewed concerns among domestic traders that greatly elevated quotes for North American product are strangling export demand. Concurrent losses in soybeans due to improved South American weather may have added to the downward pressure. Modest equity index gains and slippage by the U.S. dollar may have supported the market. Traders may also have viewed the market as approaching oversold levels after five days of losses. March corn settled 2 3/4 cents to $7.25, while the December 2013 contract dipped 1 1/4 cents at $6.25 3/4.

After having recently performed relatively well in response to excessive rainfall over sizeable portions of Argentine growing areas, soybean futures seemingly proved vulnerable to a change in the weather. Forecasts for near ideal conditions over Brazil and Argentina during the next two weeks were followed soon thereafter by significant losses in CBOT soybean futures Wednesday morning. Follow-through wheat losses in reaction to the WASDE report may also have weighed upon the soy complex. However, the bean market firmed in reaction to news that processors had boosted basis bids, thereby implying improving cash markets. January soybeans settled actually closed 1 1/2 cents higher at $14.73 1/2 per bushel. January oil fell 0.66 to 49.18 cents/pound and January meal had advanced $3.9 to $452.0/ton on the day.

The wheat market apparently felt the persistent influence of Tuesday’s bearish WASDE report through Wednesday’s trading, since the data had negative implications for both the domestic and global markets. Talk of spreading strikes at various U.S. ports seemingly had little impact, since grains and soybeans usually aren’t shipped in containers. Ideas that the U.S. winter wheat crop will be quite vulnerable to winter kill during the coming weeks may be supporting the market to some extent, but that hasn’t appeared at all obvious lately. We have to wonder if traders belatedly became aware that a French agency raised its forecast for French soft wheat exports in early trading. Whatever the cause, U.S. futures closed poorly. March CBOT wheat fell 9 1/2 cents to $8.12/bushel, while March KCBT wheat dove 18 1/4 to $8.65 1/2 and March MGE futures slipped 7 1/2 $9.04.

After surging in response to wholesale price gains Tuesday, live cattle futures seemed set to build upon the advance today. But that was not the case, as exemplified by decidedly mixed closes posted by the 2013 contracts. One has to wonder if the fact that Monday’s large deliveries (115 lots) were retendered rather than being kept or demanded by packers weighed upon nearby futures. In addition, having so many reclaimed (87 lots) suggests those deliveries could be hanging over the market during the days ahead. Choice cutout also declined, although that news may have been partially offset by the concurrent rise in select values. February cattle futures declined 0.15 cents lower at 131.80, while the April contract climbed 0.22 to 135.75 cents/pound.

Wednesday news concerning the hog and pork complex seemed less than supportive of CME futures, since both cash and wholesale quotes were down somewhat. Late-morning news that heavy hams were called steady-to three cents lower was not friendly. The intra-day reversal suffered by live cattle futures probably weighed on the swine market as well, as did projections for a substantial drop by the CME index. However, fund buying reportedly came on top bullish supply forecasts for 2013, thereby sparking a dramatic surge in Wednesday afternoon trading. Such ideas may eventually prove correct, but we have to wonder if today’s buying was premature. February hogs jumped 1.35 cents to 85.65 and June surged 1.0 cent at 100.05 cents/pound.